I think everyone once faced such requests from relatives.And the decision to lend them money or not depends only on their reputation.I have been in similar situations when I refused,but referring to the fact that I do not have free money.
Yes, a lot of people probably must have gone though such an experience of a family member or a close friend requesting for a loan and in a lot of cases, those requests have been either politely declined due to legitimate fears of not being paid back. Obviously, the decision to part with your money solely depends on the reputation of the person.
Lots of relationships have been lost due to lending of money. I hope people quickly realize the fact that with the worsening economic situation globally, money is getting harder to come by and the amount sitting in the bank is slowly but steadily losing some of its value.